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After a series of fraud issues exposed to the public, Mitsubishi Motors suffered from a significant loss in the first half fiscal year 2016(April to September), a net loss of 239.6 billion yen. The fraud issue affected not only domestic market but decreasing sales in other Asian countries and European markets.

On May 12, 2016, Nissan invested in Mitsubishi and became the biggest stakeholder. Nissan and Mitsubishi would collaborate on purchasing decisions, localization and plant utilization. The two companies will also hare technologies and work to expand their presence in developed and emerging markets.

As the new chairman-elect of the Mitsubishi Motors board, Nissan’s chairman and chief executive officer, Carlos Ghosn, has two priorities: Help the troubled Japanese carmaker regain consumer trust and return it to a growth path.

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I think the root cause of fraud is the corporate culture and management style.

  • Corporate social responsibility: The company should develop its corporate social responsibility. It has large economic support from its parent company and also the new partner, so it should make use of this investment to develop its competitive position and improve the level of efficiency. What’s more, they should improve the sense of law and ethical responsibilities. They should be resposible for stateholders, such as consumers, employees and also the environment.
  • Management : CEO and managers should be moral managers. They should use their transformational leadership to affect others. The company should decrease the management staffs and simply the management levels to enhance the communication between employees and managers.
  • Corporate culture: It is hard to change the old corporate culture at once. But managers could change little by little. The company should not just focus on profit, but a ethical company. Managers should allocate the resources to each department evenly and reasonably. They should highly comply to law and develop a high awareness of ethics as a role model. They also should communicate with subordinates often and listen to their suggestions.
  • Value the response of stateholders: The company should attach great importance to stateholders’ response and even complains. These are direct resources of evalution of the behaviors of the company. And the company should treat every stateholder equally, not like the passive response to China in 2000.
  • Seperate the car testing certification department with the research or other internal departments in the company. Those tesing department should be independent to prevent the intervetion of the higher management. And the company should post its financial and management process to public.

I wish we could see Mitsubishi comes back one day with its new look and win back our trust.

 

Reference

  1. http://video.cnbc.com/gallery/?video=3000561256
  2. http://www.bloomberg.com/news/articles/2016-08-02/mitsubishi-motors-report-cites-poor-governance-for-mileage-fraud

 

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